Copperbelt jobs hit hardest by Economic Slowdowns

The threatened layoff of 4,700 workers by Mopani Copper Mines following a contractual dispute between the company and the Copperbelt Energy Corporation (CEC) is reminiscent of the economic challenges which hit the Zambian economy in 2015 and led to massive job losses on the Copperbelt, including about 4,300 at Mopani.

New research by the Zambia Institute for Policy Analysis and Research (ZIPAR) shows that the Copperbelt was the hardest hit.

ZIPAR conducted a survey of businesses and a nationally representative survey of the public in 2016 and found that the Copperbelt had the highest net job losses – 11.8% of respondents reported losing their jobs in the last year in contrast to Lusaka which recorded job loss of 8.4% and other provinces where the figure was just 4.1%.

The research also highlights that respondents in the Copperbelt were more likely to report reductions in wages. Nearly three in five (59.3%) of the respondents on the Copperbelt and 59.6% of respondents from other provinces reported a reduction in wages and salaries compared to only 31.3% of the respondents in Lusaka.

More positively, fewer residents of the Copperbelt reported that their economic situation had worsened. At 52.9%, the people on the Copperbelt had the lowest proportion of those who felt their own personal economic situation had got worse. At 58.9% and 60.8%, Lusaka and other provinces, respectively, had proportions higher than the national average. Other findings included:

The Copperbelt had the largest proportion of people who perceived the general economic situation to be adverse: the figure in the Copperbelt was 84.1%, while it was 81.7% in Lusaka and 77.7% in other provinces.

Reduced working hours: Nine in ten (89.2%) of the respondents on the Copperbelt reported reduced hours of work compared to two thirds (66.8%) in Lusaka and 48% in the other eight provinces.

ZIPAR are also warning that jobs are unlikely to come back, at least in the short term. Since the lows of 2015, Copper prices have been on the increase, bringing hope to the ravaged mining sector that the lost jobs will come back. Despite the recent price optimism in 2016 and the first half of 2017, world demand for copper, as well as copper prices, remain unpredictable. It is therefore unlikely that the mines will, in the short term, shift back to aggressive growth strategies and hiring of workers at the same scale as before.

Besides the short term solution of resolving the impasse on power tariffs and therefore power supply to Mopani, it is necessary to diversify the Copperbelt economy to help bring back jobs in the medium to long term. ZIPAR’s proposals for bringing back jobs to the province include:

Harnessing the skills dividend: After Lusaka, the Copperbelt has the highest percentage share of employed persons with skills training. It also has the highest percentage share of the unemployed persons with skills training. Further, the human resource skills sets acquired in the mining sector (particularly plant and machinery operator skills) can be transferred to other sectors such as agriculture and agro-processing.

Developing a mining tourism product: Zambia has a rich mining history dating back over a hundred years. Further, it boasts of some of the largest and awe-inspiring copper mines in the world. These, coupled with recent technological advancements in mining operations, offer an opportunity for the development of a mining tourism product.

In line with Government’s policy of moving to cost reflective electricity tariffs, ZESCO increased its tariffs following approval by the Energy Regulation Board. This prompted the Copper Energy Corporation (CEC), which buys electricity from ZESCO and resells to the mines, to increase tariffs for their mining customers to 9.30 US cents/KWh instead of the individually negotiated rates that have averaged 6 US cents/KWh.

However, Mopani Copper Mines contends that this hike was against the provisions of the Power Supply Agreement between the two parties and has not been paying the new tariffs. As a result, CEC has restricted electricity power supply to Mopani leading to Mopani curtailing some areas of its operations. The mining giant, which has invested US$1 billion in site expansions and upgrades since 2014, is likely to lay off 4,700 direct workers if normal power supply is not restored.

Notes to Editors

This is based on a report titled "Calming the Copperbelt Economic Storm". The report is found here: Publications

The report is based on research commissioned by ZIPAR from Ipsos, an organization recognized worldwide as a leading specialist in conducting robust and reliable surveys and polls. The research included both a business survey and opinion poll: the business survey covered 173 private sector firms and face-to-face interviews were conducted in Lusaka, Copperbelt, Southern and Central Provinces between the 5th and 20th of April 2016. The opinion poll was nationally representative and based on a sample of 1,510 Zambians. It was conducted between the 2nd and 22nd of April 2016

The report is part of ZIPAR’s Flagship Project on More and Better Jobs.

ZIPAR is a socio-economic think-tank whose mandate is to conduct research and policy analysis. ZIPAR was established by the Government Republic of Zambia (GRZ) with the support of the African Capacity Building Foundation (ACBF).